HMRC 'lost nerve' over big tax avoiders, say MPs

British officials have "lost their nerve" in tackling tax avoidance by global corporations and have presided over a £35bn tax gap as they pursue easy prey such as small businesses and individuals, a committee of MPs says.

In a report that highlighted how the Treasury is owed missing tax payments of £35bn, the public accounts committee added that HM Revenue and Customs has left the state with another multibillion pound shortfall by failing to gather £2.6bn of an expected windfall from Swiss banks.

The findings follow a series of damning reports into HMRC by the committee which have addressed its failings over taking on tax-avoiding corporations such as Google, Starbucks, Vodafone and Amazon.

Tax chief waived £20m owed by bank 'for fear of embarrassing chancellor'

A controversial "sweetheart" tax deal between HM Revenue & Customs and Goldman Sachs, worth up to £20m, was agreed in part to avoid embarrassment to George Osborne, according to the government's former head of tax.

Dave Hartnett wrote that he decided to settle the long-running dispute after Goldman Sachs threatened to pull out of a prized new tax framework a week after the chancellor had announced that the bank had signed up to it.

Goldman Sachs 'escaped paying £20m National Insurance bill in HMRC deal'

The Wall Street bank – which last year paid $15.3bn (£9.5bn) in bonuses to its employees – is understood to have made a sweetheart deal with HMRC which allowed it to avoid paying the full interest on a failed tax avoidance scheme set up in the 1990s.

Around that time, Goldman is understood to have set up an offshore company in the British Virgin Islands called Goldman Sachs Services Ltd. This employed all of Goldman's London bankers, who were then "seconded" to work there.

In 2009, Judge David Williams said the Virgin Islands company seemed to be created as "a way of keeping information about the GS accounts and payroll out of the public domain and confidential".

But the Goldman Virgin Islands employee benefit trust (EBT) was not alone; 21 other investment banks and other firms had also created offshore EBTs, which allowed bonuses to be indirectly invested into elaborate share option schemes.

However, in 2005 a court ruled in favour of HMRC that the EBTs were illegitimate tax avoidance devices. The 21 other firms accepted the ruling and compensated the revenue on what was owed.